What taxes do you pay in Canada?
In Canada, you are required to pay both the federal income tax and the provincial (or territorial) income tax of your place of residence.
The federal income tax rate is consistent across the country, but as the name suggests, provincial and territorial rates can vary depending on where you live.
The amount of tax you pay is based on your income for the tax year. The money collected goes toward paying for things like education, health care and other services.
In Canada, you must file taxes if you lived and worked in Canada the previous year.
No matter your income level, if you don’t file your taxes, you will be unable to access various tax credits and benefits. For instance, you won’t be able to take advantage of the Canada child benefit or the GST/HST benefit if you don’t file your federal income tax.
You should also file your taxes if:
- You are splitting pension income with your spouse or common-law partner
- You are required to repay all or part of your employment insurance (EI) benefits, your old age security (OAS) benefits, or your Canada recovery benefit (CRB)
- You have to contribute to the Canada Pension Plan (CPP)
- You have self-employment income or other eligible earnings on which you pay EI premiums
- You have tax credits from things like tuition or investments you want to carry forward to other years
And of course, if the CRA has requested that you file a return, you have to do so.
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Get the tax refund you deserveWhat are the federal tax brackets in Canada?
Each year, the income tax brackets change. The changes are due to adjustments that account for inflation and other economic factors.
Here are the tax brackets for the 2022 tax year (for taxes due May 1 2023):
- 15% for $50,197 or less
- 20.5% for $50,197 to $100,392
- 26% for $100,392 to $155,625
- 29% for $155,625 to $221,708
- 33% for more than 221,708
If you made $62,000 in 2022, your federal income tax would look like the following:
- 15% on the first $50,197, or $7,529.55
- 20.5% on the next $11,803, or $2,419.62
The total amount of federal tax payable: $9,949.17
What are the provincial and territorial tax brackets in Canada?
In Quebec, you must file two separate returns: one for federal tax and one for provincial. In all other provinces and territories the taxes are submitted together.
| Province/Territory | Provincial/Territorial Tax Rate |
|---|---|
| Alberta | 10% for $134,238 or less 12% for $134,239 to $161,086 13% for $161,087 to $214,781 14% for $214,782 to $322,171 15% for $322,172 and over |
| British Columbia | 5.06% for $43,070 or less 7.7% for $43,071 to $86,141 10.5% for $86,142 to $98,901 12.29% for $98,902 to $120,094 14.7% for $120,095 to $162,832 16.8% for $162,832 to $227,090 20.5% for $227,091 and over |
| Manitoba | 10.8% for $34,431 or less 12.75% for $34,432 to $74,416 17.4% for $74,417 and over |
| New Brunswick | 9.4% for $44,887 or less 14.82% for $44,888 to $89,775 16.52% for $89,776 to $145,955 17.84% for $145,956 to $166,280 20.3% for $166,281 and over |
| Newfoundland and Labrador | 8.7% for $39,147 or less 14.5% for $39,418 to $78,294 15.8% for $78,295 to $139,780 17.8% for $139,781 to $195,693 29.8% for $195,694 to $250,000 20.8% for $250,001 to $500,000 21.3% for $500,001 to $1,000,000 21.8% for $1,000,000 and over |
| Northwest Territories | 5.9% for $45,462 or less 8.6% for $45,463 to $90,927 12.2% for $90,928 to $147,826 14.05% for $147,827 and over |
| Nova Scotia | 8.79% for $29,590 or less 14.95% for $29,591 to $59,180 16.67% for $59,181 to $93,000 17.5% for $93,001 to $150,000 21% for $150,001 and over |
| Nunavut | 4% for $47,862 or less 7% for $47,863 - $95,724 9% for $95,725 - $155,625 11.5% for $155,626 and over |
| Ontario | 5.05% for $46,226 or less 9.15% for $46,227 to $92,454 11.16% for $92,455 to $150,000 12.16% for $150,001 to $220,000 13.16% for $220,001 and over |
| Prince Edward Island | 9.8% for $31,984 or less 13.8% for $31,985 to $63,969 16.7% for $63,970 and over |
| Quebec | 15% for $46,295 or less 20% for $46,296 to $92,580 24% for $92,581 to $112,655 25.75% for $112,656 and over |
| Saskatchewan | 10.5% for $46,773 or less 12.5% for $46,774 to $133,638 14.5% for $133,639 and over |
| Yukon | 6.4% for $50,197 or less 9% for $50,198 to $100,392 10.9% for $100,393 to $155,625 12.8% for $155,626 to $500,000 15% for $500,001 and over |
To demonstrate, if you made $62,000 in 2022 and lived in Newfoundland, you would pay the following in provincial income tax:
- 8.7% on the first $39,147, or $3,405.79
- 14.5% on the next $22,853, or $3,313.69
The total provincial income tax owing would be $6,719.48
When combined with the federal tax of $9,950.40, the total amount payable in taxes would be $16,669.88.
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Sign up nowHow to reduce your taxes
The less you have to pay in taxes, the more income you get to hold on to.
There are various ways to reduce the amount you might owe. Everything from RRSP contributions, to charitable donations, to medical expenses can be deducted.
One deduction that is automatically applied when you file your taxes is the basic non-refundable tax credit, or personal amount.
The basic personal amount for the 2022 tax year is $14,398. Taxpayers are allowed to claim 15% of their non-refundable tax credits. In the case of the basic personal amount, this means that you can reduce your taxes payable by $2,159.70 (15% of $14,398).
For example, if you make $62,000 a year, your federal income tax payable is $9,950.40. When you deduct 15% of the personal amount, the amount payable is reduced to $7,790.70
Every province and territory has their own tax credits. These can be used to reduce the amount of tax that you might owe, or increase the refund you receive. To find out more about the credits available, consult your province or territory’s website.
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